04.10.1999 - Reykjavík, Iceland: Opening Speech at the Canada Days in Iceland

4.10.1999

The Canada Days in Iceland
Opening Speech by H.E. Halldór Ásgrímsson, Minister for Foreign Affairs and External Trade
October 4, 1999

Introduction

Ladies and Gentlemen,

It is with great pleasure that I address you this morning at the outset of Canada Days in Iceland an occasion designed to bring Icelandic and Canadian businesses together. I believe this event is both timely and very well grounded since the countries have traditionally had very good trading relations. Trade volume between our countries has been moderate but it is our belief that there is an ever-increasing interest by the Icelandic private sector to expand their activities in Canada. The same can be said about Canadian interests in Iceland, as is evident by today's event.

Iceland and Canada have shared close and friendly ties for a long time. A large proportion of the Icelandic population migrated to Canada during the latter part of last century and the early part this century. Today, we find by far the largest population outside Iceland, in Canada and estimates are that the number of Icelanders in Canadian-Icelandic community exceeds seventy thousand.

As a matter of a fact, Canada has always fascinated Icelanders, as has been documented extensevely in the Sagas and other Icelandic literature. Two contemporary novels, Lífstré - "The tree of life" and Hýbýli Vindanna - "Home of the Winds", tell a captivating story about Icelanders migrating to Canada and both novels have been on the best sellers list for the past two years. I believe this signifies a renewed interest among Icelanders, in the history of their fellow countrymen who travelled and settled in the New World.

Next year we will be celebrating two important historic events. 125 years ago the first immigrants from Iceland arrived in Canada and one thousand years ago an Icelander, Leifur Eiríksson, was the first European to discover and set foot on the North American continent in eastern Canada.

The Government of Iceland, in close co-operation with the Canadian Government and Icelandic organizations in Canada, will commemorate those historic events in a variety of ways and the festivities will take place in several cities around Canada, which we firmly believe will further strengthen our countries' relations.

Furthermore, a Consulate General Office of Iceland has been opened in Winnipeg, Manitoba and we are working towards opening an Embassy in Ottawa within two years. This is to reflect, in a concrete manner, the importance Iceland attaches to the already excellent relations with Canada and our determination to strengthen our future relations.

Economic Environment

The Icelandic economy has shown unrivalled growth performance since 1994, averaging over 4 per cent annually, representing one of the best-sustained growths in the OECD area. This year's output is expected to grow over 5 per cent and next year's prospects show continued growth.

The prolonged upswing has been attributed to a combination of factors:
· Firstly, a surge in business sector investment, where foreign investment played a pivotal role led primarily by three large projects.
· Secondly, an increase in private consumption that has risen by as much as 9 per cent annually in recent years...
· ...and thirdly, by favourable fish catches and high marine export prices.

One cannot refer to the excellent track record of the Icelandic economy without mentioning the fundamental transformation of the general business environment that has taken place at the same time.

The current Government, especially in the context of Iceland's membership to the European Economic Area, has implemented important structural reforms, which have improved considerably the climate for investment and economic growth in the country.

Furthermore, by complying with the internal rules of the European markets, Icelandic firms have become much stronger, enabling them to compete more effectively than ever before both home and abroad.

Further liberalisation of the Icelandic economy is in sight. Important liberalisation of the financial markets and privatisation of financial institutions are underway. Likewise, plans are underway in privatising the telecommunication sector.

In general, by staying the Government's economic policy from its previous term, general conditions continue to improve towards more transparent markets and stable economic environment, thus enhancing company's ability to take full advantage of these favourable circumstances.

Seizing New Opportunities

Trade liberalisation is a key element in the Government's economic policy. Iceland has been a member of EFTA since 1970 and through its membership, Iceland has been a member of the internal market of Europe, the European Economic Area, since its establishment in 1994.

Similarly, Iceland attaches much importance to the upcoming WTO Millennium-round. In particular, Iceland has proposed that negotiations on the elimination of fisheries subsidies be a part of the next round as subsidies undermine sustainable utilisation of fish stocks and hamper sustainable development, in addition to the well-known fact that subsidies distort trade.

Iceland presented a proposal to this effect in the WTO General Council last July, and I am pleased to say that Canada supported Iceland's initiative, for which I am very grateful.

Icelandic businesses have taken full advantage of freer access to world markets and greater opportunities of investing abroad. The Icelandic fisheries sector has emerged as a strong leader in the North Atlantic. Icelandic fishing companies have extended their business interests into many of the neighbouring countries like Germany and Scotland as well as into faraway countries such as Mexico, Chile and Russia to mention but few.

Icelandic seafood exporters have similarly also taken full advantage of market situations by increasingly sourcing products from around the world. Concurrently, Iceland's leading seafood companies are going through important restructuring, where large seafood companies have been merged, thereby creating world leaders in seafood production as well as in seafood marketing.

Traditional export markets like France and Great Britain, are now examples of locations, where Icelandic firms employ hundreds of people in fish processing. I believe this highlights the increased globalisation among Icelandic fishing and seafood companies during the past few years.

These developments are unparalleled in our economic history. Companies have basically redefined their areas of interest by undertaking the responsibility of investing abroad. Their activities are increasingly focused on taking full advantage of the skills and expertise their employees possess off. In a nutshell, I believe they have thereby started exporting valuable know-how based on valuable past experience, which gives the companies competitive advantage over their rivals.

However, and this I want to stress, it is not only in the field of fisheries where Icelandic firms have been gaining momentum. Knowledge based industries have shown remarkable development in recent years. A flourishing software industry already exists in Iceland, offering top of the line products on world markets. High-tech firms developing applications for the food production industries have increasingly become active on world markets and similar things can be seen in other branches of high-tech industries.

When it comes to fostering new knowledge based industries, we believe that we can learn a great deal from Canada. Reports show that Canada has created favourable business environment for high-tech industries, paying special attention to global entrepreneurship.

It is my firm belief that this is an area where both countries could benefit from an increased co-operation. It is becoming more and more evident that the future of the Icelandic economy will be closely knit to the growth and development of high-tech industries, founded on traditional sectors such as the marine sector at large. Some would even go as far as saying that the knowledge based industries will be the fuel of the Icelandic economy in the 21st. century.

Status report on EFTA - Canada free trade negotiations

I am pleased to note the progress made in the ongoing free trade negotiations between EFTA and Canada, particularly in the goods sector. At the outset the parties agreed to aim at high standard free trade agreement, involving not only free trade with goods, but also investment and services, which are very important elements.

Unfortunately, we have had to lower our ambitions somewhat but it is our aim to take up negotiations on trade in services after the next round in the WTO. Personally, I regret this as I believe both investment and services are of fundamental importance for future development of trade between Iceland and Canada.

Concluding remarks

Ladies and Gentlemen, I welcome this opportunity to strengthen co-operation between firms from Iceland and Canada. It is the responsibility of us, the politicians, to set the rules and to create the framework by which companies have to play within the economy. For some time, Iceland through EFTA, and Canada have been negotiating a new framework for firms to co-operate within, which will bring new prospects for our businesses. An important element in that development will be the improved connections between the countries both at sea and by air.
It is my hope that we will manage to conclude the Free Trade Agreement before the end of this year, thus fortifying the cultural relations and business opportunities that already exist between Iceland and Canada.